Review of Medicare Part A, Administrative Costs for Fiscal Years 1989 through 1992, Blue Cross and Blue Shield of Maryland

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EXECUTIVE SUMMARY:

This report addresses general administrative costs claimed by Blue Cross and Blue Shield of  Maryland (BCBSM) for the administration of the Medicare Part A program for Fiscal Years (FYs) 1989 through 1992. During the review period, BCBSM claimed a total of   $26,019,364 in administrative costs. The primary objective of our review was to determine whether BCBSM's costs claimed on the Final Administrative Cost Proposals (FACPs) for FYs 1989 through 1992 presented fairly the allowable costs of administration of the Part A program in conformity with reimbursement principles contained in the prescribed Federal regulations.

Our review showed that BCBSM improperly allocated costs totaling $898,627 to the Medicare program which were unallowable in accordance with applicable Federal regulations and the terms of the Medicare contract.